Allie's Brexit blog: July update

09 Aug 2018

A month can be a long time in politics and recent weeks were not short of drama. Politicians debated the Trade and Customs Bills, the Government’s white paper was published and both the UK and EU sides appeared to ramp up communications about a no-deal scenario. Parliament is now in recess, but business must carry on despite any bumps in the road.

It was hot on the heels of a meeting at Chequers - during which the Prime Minister sought to secure Cabinet agreement on her Brexit strategy - that two prominent Leave-supporters quit their Cabinet posts. Brexit Secretary David Davis said it was looking increasingly unlikely the UK could leave the Customs Union and Single Market. Meanwhile, Foreign Secretary Boris Johnson disputed whether the Prime Minister’s approach to Brexit would really leave Britain independent from the EU.

Days after the Chequers meeting came the long-awaited white paper which set out the Government’s ambitions for the future UK-EU trade relationship. The UK is aiming for a ‘principled and practical Brexit’ which should be ‘broader in scope than any other [relationship] that exists between the EU and a third country’. The proposal is for a free trade area and a common rulebook for goods, but ‘regulatory freedom’ in services. It suggests a Facilitated Customs Arrangement which precludes the need for customs checks and controls between the UK and the EU. This would involve the UK collecting tariffs on behalf of the EU where goods are intended for the bloc.

The IoD has welcomed more detail on the Government’s Brexit plans and looks forward to extensive engagement with business on how these suggestions might work in practice. At the same time, however, the white paper is a little less clear on plans for the services sector as it is for goods, and there is an unanswered but key question over what mobility scheme will replace the freedom of movement. EU chief negotiator Michel Barnier said the white paper paves the way for ‘constructive discussion’, but the EU will not accept a non-member collecting tariffs on its behalf, and the plans pose a threat to the integrity of the Single Market.

In Parliament, the Government saw off narrow defeats on the Customs and Trade Bills. Notably, the former piece of legislation saw the Prime Minister accept amendments including stopping the UK from collecting tariffs for the EU unless the bloc does the same for the UK, and ruling out a border in the Irish Sea.

In amongst all these developments was the Prime Minister’s commitment that over August and September the Government will publish 70 “technical notifications” giving guidance to stakeholders on preparing for a no-deal scenario. Indeed, most of our members that are engaged in contingency planning are working on the basis of a no-deal scenario. We recently published a Brexit planning guide available exclusively to IoD members which seeks to advise members on how to approach this.

Politicians and businesses alike are mindful of the precious little time there is left to negotiate the withdrawal. Irish Deputy Prime Minister Simon Coveney recently said Ireland would support an extension of the Article 50 process if it were “necessary to get a sensible agreement”. It will be interesting to see whether other European capitals would follow suit and sign on to this view.

The IoD’s Brexit activities have kept us busy as ever. In recent weeks I gave evidence to the House of Commons Exiting the EU and Scottish Affairs Committees. We also participated in meetings of HMRC’s Joint Customs Consultative Committee which gathers business and government to deliberate customs-related matters. Our Director General Stephen Martin attended Chevening, which saw business representatives discuss Brexit issues in the aftermath of the white paper release.

It may be the summertime but we’ll be keeping an eagle eye on any Brexit developments - stay tuned to our Navigating Brexit Hub!

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